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6 May 2004

No wonder investors are speculating the business to a trade buyer. Deutsche Post is on record as saying the bank is worth E6bn. That looks a tall order to achieve for a minority IPO.

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Deutsche Post is pressing ahead with the E3bn flotation of its retail banking arm in June, despite talk that it might sell the unit to Deutsche Bank or another domestic rival.

The postal group said it would sell 50% of Postbank less a single share in a move aimed at paying down debt and raising funds for postal acquisitions. The banking unit will not raise any funds from the sale.

At the Deutsche Post annual meeting, Klaus Zumwinkel, chief executive, denied that the bank was in discussions about selling Postbank to Deutsche Bank. He said that Deutsche Post planned to retain a majority of Postbank's capital for the long term.

Zumwinkel told the Frankfurter Allgemeine Zeitung in February that Postbank's true value was not reflected in Deutsche Post's share price."Rather than 3.5 to 4.0 billion euros, I see the value of Postbank being at at least 6 billion euros," he said.

Postbank is Germany's largest retail bank with 11.5m customers. It does not own its own its own branches but trades through post offices under a complex arrangement with Deutsche Post that runs to 2010.

In 2003, it made profits before tax of E497m, and generated an after tax return of 7.6% on its shareholders' funds of E4.9bn.

Morgan Stanley and Deutsche Bank are handling the IPO.

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